If Pringles are "so good that once you pop, you can't stop", why do they come with a resealable lid? This awkward question is no longer something that Procter & Gamble (NYSE: PG - news) 's (P&G) marketing types will have to answer. Instead, the responsibility will fall to Diamond Foods (NasdaqGS: DMND - news) after the company merged with P&G's Pringles business in a deal that values the snack brand at $2.35bn (£1.4bn) including debt.
In an unusual transaction, P&G will "split off" the Pringles unit and combine it with Diamond Foods, with P&G shareholders owning 57pc of the new company and Diamond shareholders the rest. The combined group will be led by Michael Mendes, Diamond's chief executive. For P&G, the demerger of Pringles marks the world's largest consumer goods company's exit from the food sector, allowing it to focus on its cosmetics and healthcare units.
Pringles, which are sold in more than 140 countries, will give Diamond Foods a wider access to international markets and more than double its sales in the US and the UK. Diamond Foods was founded in 1912 by a group of Californian walnut growers. It remained a private company focused on selling nut snacks until 2005, when the business floated on Nasdaq (Nasdaq: ^NDX - news) . Since then Diamond Foods has been highly acquisitive, snapping up a variety of brands including Kettle Foods.
Last year, Diamond Foods paid $615m to private equity firm Lion Capital for Kettle Foods, the maker of upmarket crisps Kettle chips. The company also bought Pop Secret popcorn from General Mills (Dusseldorf: 933225.DU - news) in 2008. "We are confident Diamond Foods will be an excellent new home for our snacks employees," said Bob McDonald, chief executive of P&G. "This is also a terrific deal for our shareholders maximising value and minimising earnings per share dilution."
Mr Mendes said: "Our plan is to build upon the brand equity Pringles has established in over 140 countries. This strategic combination will create an independent, global leader in the snack industry with a focus on quality and innovative products." - Yahoo UK